Stiglitz – Opinion: Trump’s fixation on the trade deficit with China is silly

Opinion: Trump’s fixation on the trade deficit with China is silly

By Joseph Stiglitz – April 6, 2018

Market Watch

NEW YORK (Project Syndicate) — The trade skirmish between the United States and China on steel, aluminum, and other goods is a product of President Donald Trump’s scorn for multilateral trade arrangements and the World Trade Organization, an institution that was created to adjudicate trade disputes.

Before announcing import tariffs on more than 1,300 types of Chinese-made goods worth around $60 billion per year, in early March Trump unveiled sweeping tariffs of 25% on steel and 10% on aluminum, which he justified on the basis of national security. Trump insists that a tariff on a small fraction of imported steel — the price of which is set globally — will suffice to address a genuine strategic threat.

Most experts, however, find that rationale dubious. Trump himself has already undercut his national-security claim by exempting most major exporters of steel to the U.S. Canada, for example, is exempted on the condition of a successful renegotiation of the North American Free Trade Agreement, effectively threatening the country unless it gives into U.S. demands.

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